Indonesia to Raise VAT on Luxury Goods to 12% in 2025

luxury Goods to Face Higher Taxes as Indonesia Raises VAT

Jakarta, Indonesia – Indonesian President Prabowo Subianto has approved a⁤ modest increase in the⁣ Value Added ‍Tax (VAT) rate, bumping⁣ it from 11% to 12% effective January 1, 2025. The move, announced following a‍ meeting between the president ‍and‍ House leaders at the Jakarta Presidential Palace on December 5, 2024, targets specific luxury goods, both domestic and imported.

“The government will implement⁢ a 12% VAT for consumers purchasing luxury goods,” stated Mukhamad⁢ Misbakhun, Chair of the House of Representatives (DPR)⁤ commission XI. ‍”the current VAT rate will remain in effect for essential goods and services for the general public.”

Deputy ⁤Speaker of the ⁢DPR, Sufmi Dasco⁢ Ahmad, confirmed that essential goods would continue‍ to be taxed at the current 11% ⁢rate. He also hinted at potential future tax reductions for essential items, stating, “Currently, a more⁣ in-depth study is being conducted where the VAT in the future will not be at the same rate.”

The decision to⁢ raise VAT on luxury goods comes after extensive discussions between the government and parliament, ‍aimed at finding a solution that benefits society.”So today (Dec. ⁣5) the president, together with the leaders of the DPR, discussed this matter,” explained Minister of State Secretary Prasetyo Hadi, emphasizing the⁣ collaborative nature of the process.

The VAT increase is expected to generate additional revenue for the government, which can be used to fund public services and infrastructure projects.

Indonesia’s Wealthy to Feel the Pinch as VAT on Luxury Goods Rises

Jakarta, Indonesia ⁤- In‍ a⁤ move aimed at ⁤boosting government revenue and addressing social disparities, Indonesian President Prabowo Subianto has approved a modest increase in the ⁤Value Added Tax (VAT) rate,‍ effective January 1, 2025. While the overall VAT rate will remain at 11% for essential goods and services, luxury items, ⁢both domestic and ⁤imported, will be subject ⁢to a 12% rate.

This targeted approach was confirmed by Mukhamad Misbakhun,⁤ Chair of the House of Representatives (DPR) commission XI, who emphasized that the revised rate applies specifically to “consumers purchasing luxury goods.” Deputy Speaker of the DPR, Sufmi Dasco Ahmad, echoed this sentiment, reassuring the public that essential goods would retain the current 11% VAT. He further hinted⁣ at potential future tax reductions⁣ for essential⁤ items, stating that⁤ a deeper study is underway to ensure a ⁢fairer VAT structure in the long term.

The decision to raise VAT‍ on luxury goods ⁤follows extensive consultations between the government‍ and parliament. Minister of State Secretary Prasetyo Hadi underlined the collaborative nature of the process, stating that President Subianto and DPR leaders ‍”discussed this matter” to arrive at a solution that benefits society.

The anticipated increase ⁢in revenue generated by the VAT hike ⁤on luxury goods ⁢is expected to support the funding of crucial public services and infrastructure projects.